Failed business management – lessons in corporate greed

Corporate greed has recently dominated the headlines in the United States. The list of unsuccessful and disgraced CEOs and CFOs is long and alarming, and the stories of larger corporate rubble are quite disturbing.

How did all this happen?

What were the causes?

Who failed to lead?

What happens to teaching ethics?

Ethics is now taught in the classrooms of the Graduate Schools of Business throughout the US and now in the world. It’s too little and very late. The paradox is on the same Graduate Schools of Business is that less than two decades ago the MBA classes heard and learned all the benefits, executive “perks”, boardroom tricks and big bucks stories, war stories of corporate attacks, mergers and acquisition of a megamillionaire and billionaire and the king’s ransom “golden parachutes.”

It should come as no surprise to anyone that, after making Ivan Bosky boast of his lucrative offerings, that they made a lack of moral virtues and coveted all toys and “perks.” The world of the immoral world of greedy CEO is full of 100-foot yachts, 10,000 square feet. ft home with tennis courts, media room and ten car garages, immorality and affairs, appropriate goals for a senior manager, expected behavior and mandatory for all successful CEOs.

For Ivan Bosky to be invited to give a major lecture to all MBA students in one of the most prestigious Graduate Schools of Business with the incredible message: “BEAUTIFUL IS GOOD!” is beyong belief in an institution of higher education. Universities must evolve as leaders, not our losers.

It’s such a sad but telling comment on the state of our collective lack of moral integrity that the popular movie, WALL STREET, had actor Michael Douglas as Corporate Raider Gordon Geeko, who he portrayed as a rich tycoon of the industry. In the film, Gordon Geeko is presented as a powerful dealmaker with no morals. Geeko in the movie uses actual quotes and mentioned paraphrases, which are soon to be sifted, fined and imprisoned with the Ivan Bosky message “BEAUTIFUL IS GOOD!” It is very sad comment that the same message was delivered to the world and all the hopeful staff who now knew it was OK to steal, lie and cheat!

The events of the last ten years reveal a material error in the moral fabric of some formerly respected corporate executives. The constant current pressure on the next quarter’s profits and pushed to increase “earnings per share” and raise the stock price has prompted some senior executives of US companies to ignore the basic morality of honesty, especially if the news is bad. Unfortunately, some business executives began to believe in their own press kits, lost their moral compass, and fell victim to corporate greed illness. All of the leaders whose behavior is described above have not been able to demonstrate “moral virtue” or live a life consistent with basic honesty, the simple basic laws of the Old Testament, “Ten Commandments.”

Just as we hopefully raise our own children by these three great teachers, “example and example,” we must demand that our leaders and other key role models provide the “right example.” Moral virtue, unfortunately, has lacked these top executives in major US listed companies. To build trust, Americans must demand that our corporate and political leaders demonstrate by every act, thought and action that they stand for honesty and integrity. The leaders described above were not confident. These fallen executives have shown unsuccessful leadership.

Let’s stroll through the recent business crime and the results of preaching in Ivy Halls in the MBA classrooms that actually make money regardless of the cost to others and that “Greed is good!” to MBA students and all over the world who have been unfolding from teaching the “Seeds of Greed”. The total losses due to corporate fraud, corporate greed, job losses and federal government bailouts climb daily into the tens of billions of dollars.

The totals only continue to grow and the financial problems they create have a material adverse effect on the stability of the stock market. The real tragedy is the destruction of millions of individual investors’ finances and the personal destruction of those employees who not only lose their jobs but their pensions at the same time.

Even the watchdog New York Stock Exchange (NTSE) has had a scandal. Retiring chairman Dick Grassos’s infamous multi-million dollar pension package, approved by the NYSE board, shocked everyone as the over $ 139.5 million paid package deal became public knowledge.

The top executives at Enron have become an icon of corporate greed, massive fraud, dishonesty, unethical behavior and failed leadership. Andrew and Lea Fastow have fallen from grace, pleaded guilty and are convicted. Andrew, Enron’s former chief financial officer, begins his 10-year securities and management fraud conviction as soon as his multi-millionaire-inheriting wife, Lea, ends his one-year prison term for insider trading with the Enron stock in her family organization. Lea Fastow, along with Enron executives Kenneth Lay, the (now deceased) founder and former Enron chairman, Jeffery Skilling, the former president and CEO of Enron, and Richard Causey, CEO of Enron, denied all wrongdoing. The jurors have tried them and found them guilty, guilty and guilty.

Enron’s Kenneth Lay, Jeffery Skilling and Richard Causey all arrogantly refused to negotiate with federal prosecutors or admit their guilt. All three of them are now prosecuted and convicted of a variety of criminal cases, including securities fraud, bribery, coordination and conspiracy to commit fraud, wire fraud, filing false accounts and many more. In addition to the pending charges, there are civil lawsuits from investors and employees who lost billions in the fall of Enron.

The late Kenneth Lay went on to declare his innocence at every criminal act on Enron, even after his conviction. He further claimed that he, the founder and former chairman of Enron, was not aware of Enron’s financial details. Even before the U.S. Senate Committee, Lay instead of testifying, he took “the fifth.” The conclusion must be drawn that Lay knows he is guilty of several criminal acts. He was clearly unwilling to admit his guilt to the United States Senate Committee.

Unfortunately, Enron is just part of the long list of greed that plagues America in the 21st century. Bernard Ebbers, former CEO of [MCI] WorldCom Inc., was indicted and convicted on charges of conspiracy, securities fraud and wrongful registration. Prosecutors claim, and it successfully proved to the jury, that Ebber’s was the leader in a $ 11 billion accounting fraud. “

The flamboyant and extravagant former CEO of Tyco International Ltd. L. Dennis Kozlowski and his ex-Chief Financial Officer Mark Swartz are both about to go back to Federal Court for a retrial. Kozlowski has been dubbed the poster boy for business transgression. He was convicted on a number of criminal charges, including stealing $ 600 million from Tyco Corporation, and it’s shareholders.

Kozlowsky’s exploits with women and wild spending are all detailed in the book, Testosterone Inc: Tales of CEOs Gone Wild (Byron, 2004). He portrays Kozlowski along with Jack Welsh, former chairman of General Electric, “chainsaw” Al Dunlap of Sunbeam, and Revlon’s Ron Pearlman, as having feet of clay and rock stars of morality – drunk with power and driven by sex, greed, extravagance and glamor.

Richard Scrushy, founder and former CEO of HealthSouth Corp, is another on the list of CEOs who deny any wrongdoing. He was acquitted of criminal wrongdoing. But William Owens, former CFO of HealthSouth, and four other former CFOs of HealthSouth have all pleaded guilty.

Scrushy was charged with helping exaggerate the company’s earnings by nearly $ 3 billion from 1996 to 2003. Scrushy was indicted by a federal grand jury on 85 counts of fraud, money laundering and other offenses. I have faced over 650 years in prison and $ 36 million in fines on these charges.

In Scrushy’s lawsuit, Leif Murphy, a former vice president of HealthSouth who worked in the firm’s finance department and is not charged with a crime, gave damning testimony to Scrushy. Murphy testified that Scrushy had become very angry and Scrushy had shouted at Murphy when Leif Murphy challenged Scrushy about the release of false financial information. Not against the fact that Scrushy’s string of four CFOs in which they were convicted or pleaded guilty, Scrushy was found not guilty of all criminal charges.

The government also sought $ 278 million in forfeiture from Scrushy, who has proclaimed “I’m an innocent man” many times, including in his interview on CBS’s “60 Minutes” on October 26, 2003. His attorneys somehow managed to get him away from these criminal charges related to major scams at HealthSouth is only Richard Scrushy, who is convicted of multiple charges of bribery and his now in jail.

At Fannie Mae, the career of respected CEO Franklin Raines came to an abrupt end when the Office of Federal Housing Enterprise Oversight forced a very resilient Fannie Mae board member to remove Raines. Raines, Fannie Mae’s board of directors and his supporters insisted he was not responsible for abusive accounting standards. But his friendship thoughts were rejected and his testimony was not accepted as the full truth by the SEC, the U. S. Congress or the public.

Raines rose from being a poor kid from Seattle to moving on from Harvard, earning a Rhodes scholarship and becoming a Budget Director for the White House before being named executive director of Fannie Mae. Now Raines’ lucrative retirement package (“early retirement”) has become a new issue of contention. There have been well-documented cases of massive fraud, mismanagement and accounting errors at Fannie Mae during Raine’s tenure as CEO.

While Raines has never been convicted of committing or approving the false accounting, there was a major upset over his severance package when news broke that he had apparently been negligent in overseeing accounting functions at Fannie Mae. Yet somehow astonishing, the dead and lapsed Franklin Raines (after the US government took over and rescued Fannie Mae) became a “financial adviser” to the then presidential candidate, US Senator Barrack H. Obama,

In this post-Enron, post-WorldCom, and post-Tyco world, the rules of the playing fields of American business are enforced. Even one of the largest and most profitable insurance companies in the world, American International Group Inc. (AIG), has had a serious battle with both the Securities & Exchange Commission and the U. S. Justice Department, which started back several years ago.

The financial troubles and fraud at AIG really began in 2001 (or maybe even earlier), but it took three years for SEC securities regulators to catch it. In 2004, SEC AIG stated that it was investigating filing securities fraud charges against it for their non-arms-length relationship with PNC Financial Services Group Inc., and what the SEC calls a pattern to help PNC hide their underperforming loans, and start coming back at least 2001.

The full impact of the seeds of greed sown earlier this decade and subsequent wrongdoing has led to the major disaster at AIG, which has now been revealed in 2008 and 2009. Now AIG’s failure has resulted in the Federal Government Bailout costing US Billions and Billions taxable dollars.

The list of accused and failed corporate executives is long and growing. In August 2003, it was reported that the story of Adlephia’s John Riga’s wrongdoing and two of his sons failed to emerge. They were indicted and convicted of fraud with Adlephia Communications Corp. at $ 2.5 billion.

One of the lessons these leaders should have learned and lived was basic ethics or morals. The Sarbanes-Oxley Act of 2002 [H. R. 3763], passed by the United States Congress on January 23, 2003 and was immediately signed into law by President George W. Bush.

From a basic moral, perhaps even a religious, perspective, the Sarbanes-Oxley Act would not have been necessary if corporate executives had just lived the “ten commandments,” or at least just three of them: “Don’t steal,” ” Thou shalt not covet, “and” Thou shalt not bear false witnesses. “